Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar from Antique Stock Broking. Thank you, and over to you, sir.
Thank you, Rohit. On behalf of Antique Stock Broking, I would like to welcome all the participants on the Q2 FY 2024 earnings call of Dhanuka Agritech. From the management, we have Mr. N.K. Dhanuka, Vice Chairman and Managing Director, Mr. Rahul Dhanuka, Joint Managing Director, Mr. Harsh Dhanuka, Executive Director, Alliances and Supply Chain, and Mr. V.K. Bansal, CFO on the call. Without further ado, I would like to hand over the call to Mr. N.K. Dhanuka for opening remarks, post which we will open the floor for Q&A. Thank you. Over to you, Mr. Dhanuka.
Thank you, Manish. Good afternoon, ladies and gentlemen. Myself, N.K. Dhanuka, Vice Chairman and Managing Director of Dhanuka Agritech Limited. I hope all of you are doing well. Thank you for joining us in this conference call for results of Q2 FY 2023-2024 of Dhanuka Agritech Limited. I have with me Mr. Rahul Dhanuka, Joint Managing Director, Mr. Harsh Dhanuka, Executive Director, and Mr. V.K. Bansal, CFO. As you know, Dhanuka Agritech is a leading agrochemical company in India, focusing on branded sales in the market. The company's strength lies in manufacturing and marketing of formulated products. The product portfolio is spread across insecticides, herbicides, fungicides, and plant growth promoters. Dhanuka Agritech is working with a vision of transforming India through agriculture.
Our belief is that when we transform the farmers by enhancing their productivity and quality, and in turn enhancing their income, we are making a small contribution to transforming India. We work in all major crops in India and have implemented the best-in-class technology to ensure a smooth and efficient supply chain. Dhanuka have a pan-India presence through its marketing team and warehouses in all major states across India. With 4 manufacturing units and 41 warehouses across India, Dhanuka cater to around 6,500 distributors and dealers and around 80,000 retailers. Through this extensive network, Dhanuka reaches out to approximately 10 million Indian farmers with its products and services. Dhanuka has more than 1,000 technical commercial staff, supported by a strong sales and marketing team, to promote and develop new products.
Dhanuka's strong R&D division has world-class NABL-accredited laboratory, as well as an excellent team for new product registration and development. Dhanuka has international collaboration with 10 leading global agrochemical companies from the U.S., Japan, and Europe, which helps us to introduce the latest technology in India. As per a recent report of CRISIL rating, agrochemical makers will see a 3% drop in revenue in FY 2023-2024, for the first time in a decade, due to falling prices globally, muted demand for exports owing to destocking by global manufacturers, and the impact of lower reservoir levels on rabi sowing, especially in southern and western part of India. However, I'm happy to share that Dhanuka has shown good growth during the last quarter in spite of the above challenges. We maintain a constant focus in reaching to our customers and understanding their requirements dynamically.
Accordingly, we are able to change our plans quickly with our flexible supply chain system. Further excellent demand for our product Decide, introduce in last year, as well as some powerful product introduction in the current financial year, supported the revenue growth. Our insecticides portfolio has grown substantially due to these introductions and contributed to the growth in Q2. Dhanuka have also commenced operations at its new chemical plant in Dahej, and it started production of Bifenthrin technical with effect from 8 August 2023, which was 43rd Founders Day of Dhanuka. Coming to the financial performance for quarter 2 of FY 2023-24, the revenues from operations stood at INR 617.92 crores in Q2 of FY 2023-24, against INR 542.9 crores in Q2 FY 2022-23, having a growth of 13.82%.
EBITDA stood at INR 141.58 crores in Q2 FY 2023-24, against INR 97.52 crores in Q2 of FY 2022-23, having a growth of 45%. Profit after tax was at INR 101.77 crores in Q2 FY 2023-24 versus INR 73.02 crores in Q2 FY 2022-23, having a growth of 39.37%. Considering all the constraints, I would like to place on record my appreciation for the total Dhanuka team, who has been able to deliver such good results. The zone-wise percentage share of turnover for Q2 FY 2023-24 is as under: North, 24%; East, 11%; West, 34%; and South, 31%. Product category-wise share of turnover for Q2 of FY 2023-24 is insecticide, 44%, the highest share in this category.
Fungicides, 18%; herbicides, 25%; and others, including PGR. During this quarter, the company has launched 2 products. First is Tizom. Tizom is a 9(3) product type for sugarcane crop that has effective control over sedges, broadleaf, and narrow-leaf weeds. Tizom is launched in collaboration with Nissan Chemical, Japan. The second product is Semcia. Semcia is a co-marketing product, a broad-spectrum insecticide with excellent efficacy against lepidopteran insect pests on a range of crops. I would like to inform that Dhanuka Agri Solutions Private Limited, a company's wholly owned subsidiary, which was incorporated in Bangladesh, has been liquidated with effect from 10th August 2023. This company was incorporated in the year 2011. However, it was not in operation since its inception.
Further, the board in its today's meeting has also approved the dissolution, sale, transfer of Dhanuka Chemicals Private Limited, the company's wholly owned subsidiary, incorporated for undertaking the Dahej projects of the company. The Dahej plant operations started in Dhanuka Agritech Limited itself, therefore, there is no requirement to exist, continue with this company. I would like to inform you that Mr. Mridul Dhanuka has tendered his resignation from the office of Non-Executive Director of the company with effect from the close of business hours of November 7, 2023, stating the reason that due to his pre-occupation in Orchid Pharma Limited, he is unable to give the time for the company. The board places on record its appreciation for the invaluable contribution made by Mr. Mridul Dhanuka during his tenure as Executive Director and Non-Executive Director of the company, and accepted his resignation.
I would like to inform you that the board has approved the appointment of Mr. Manish Dhanuka as Additional Director under the category of Non-Executive Director, and further recommended to the members for their approval for his appointment as Non-Executive Director, who will be liable to retire by rotation. Mr. Manish Dhanuka has wide-ranging experience in handling operations, marketing, and finance in the manufacturing industry. He excels in creating economical pharmaceutical technologies and accelerated evaluation processes for improving healthcare. He has experience of 25 years in the pharmaceutical industry and has expertise in chemical synthesis. He holds B.Tech. in Chemical Engineering from IIT, New Delhi, and M.S. in Chemical Engineering from the University of Akron, USA. He's on the board of Dhanuka Laboratories Limited, Orchid Pharma Limited, Orchid Bio-Pharma Limited, Otsuka Chemical (India) Private Limited, and Synmedics Laborations.
Dhanuka considers itself responsible towards securing the farmers' welfare and preserving food security of the nation. We continue to strengthen our association with the farmer producer organization, Krishi Vigyan Kendras, and other critical institutions to increase our business expertise and boost our market presence. Thank you very much for your kind attention. We would now like to open the forum to take questions. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Himanshu Upadhyay from O3 Capital. Please go ahead.
Yeah. Hi, good afternoon, and congratulations on a very good set of numbers and performance. My first question was, we are hearing from many agrochemical companies that who are into more backward integrated and the prices of their products have fallen far below the cost of production, also in certain categories, okay? What is opportunities this formulator does it bring for us? Because, can we benefit over the intermediate term by having a inventory buildup of certain goods where the price of the commodities has fallen quite significantly, what we understand from other peers. And do you think this situation to continue for pretty long period of time?
Thanks for your query. Your question is not clear, both in terms of audio and in terms of the question itself. So probably your audio itself is playing, so could you make it better?
Am I audible now?
Yes.
Yeah. So my question was, what we are hearing that agrochemical prices have fallen quite significantly, okay? And some of the companies have stated that the cost of production is, means the fall has been such that the price of commodity or agrochemical is below the cost of production. What type of opportunities that will bring for us, okay? And can we- do you think that we can hold on to larger inventory because the prices are so low? Or you think this situation will continue for quite some period of time, and hence it does not make any sense in buying inventory or building inventory? What's your thought on that?
Has continued now for almost nine months, that the prices are optimizing month-on-month. Almost for all the products, they optimized over the last nine months, and the uncertainty continues for a while. So it's a tricky balance as to which products inventory to keep in anticipation of good sales, and which product inventory not to keep in anticipation of further reduction. So it's a tricky balance, and we are doing that tightrope walk already. So there's no straight situation as to should we keep high inventory or not. We choose it product by product. Dhanuka has a huge range of more than 90 brands, and we reach out to the farmer with comprehensive solutions, and we reach out to the farmers based on the seasonality and change in crop portfolio. We modify our inventory holding accordingly.
But you don't think the, because of significant fall in commodity prices, we can hold on to the higher inventory in the top 10 products what we sell?
No, I don't think so. I can say that with a certainty, because the price action is still happening. The inventory that I will hold for top ten products will not correct in next month, is not guaranteed.
Okay. Are you seeing the prices of the finished goods also fall in the domestic market? Or you are saying that because of being more branded, we are able to maintain our prices on majority of our portfolio.
We have to pass on the benefits to the farmer in a market which is optimizing at the back end, and Dhanuka follows a dynamic pricing mechanism, and we try to offer the best value to the farmer. So we do correct the prices every month, sometimes increase, sometimes decrease.
In the first six months, how much would be the volume increase and value increase?
Maybe request you to attend to the question queue for the follow-up question.
Last question, last question.
I'm sure our other audience will be interested in this response specifically. The volume increase is close to 10%, more than 10%, and the value increase is already there, is around 5.5%.
Okay, thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Darshita from Antique Stock Broking. Please go ahead.
Yeah, thank you for the opportunity. So, just one clarification, the volume growth of 10%, was it for first half or was it for 2Q?
It is for first half. In Q2, the volume growth was around 9, around 20%.
Okay. Got it. And, have you taken any price hike on sequential basis?
Could you repeat?
Have you taken any price hikes on sequential basis on overall portfolio? Have you taken any price hikes?
We have modified our prices month-on-month, as and when required. Sometimes there is price hike also.
Okay. Could you quantify, I mean, if it's possible, on overall portfolio basis, what kind of price hike and price reduction you've taken on sequential basis?
There may not be a standard response to that, but if you could, you know, kind of compare that to the volume increase is close to, is more than 10%, and the value increase is 5.5%. So actually, there is a delta where the overall portfolio price would have gone down.
Okay, got it.
Product by product, there has been price increase, but overall, if you look at, you know, over six months, prices have actually gone down.
Got it. My second question regarding the gross margin expansion, if you could, help us out the reason behind what has led to the strong gross margin expansion?
Yeah, you see, expansion in the gross margin is due to two things. One is the product mix. In Q2, our entire growth is coming from the lifeline portfolio, in generic, just like flat. And secondly, last year there was a huge loss of amount of the inventory, which is now there in that, in that particular year. Because of which, we could see able to deliver very good gross margin in Q2.
Got it. Could you quantify the gross margin expansion between these two? How much was because of product mix and how much was because you know, the evening out impact of high cost inventory?
You see, the impact of the product mix is large on account of the, say, you can say two-thirds is because of the product mix and one-third because of the high inventory cost in the previous year, which is not there in that case.
All right. And just one last question on the product side. What we hear and what we've gathered from the customer channels is that insecticide and fungicide as a portfolio has not done very well during Kharif. So if you could provide us some idea as to how did Decide do so well, firstly, especially for the second quarter, and the market size and the market opportunity that we are seeing for this particular product.
Decide is a very versatile insecticide coming from Mitsui Chemicals of Japan, from Dhanuka. This is our 90 registration product, and this has done extremely well because of its huge opportunity on the major targeted crop, chili. So chili has a major opportunity in country, especially this year, because of the chili commodity prices also being very high. Other than chili, Decide has been accepted by farmers in various other crops also, which get impacted by such pests like whitefly, green jassid, mites, and thrips. Decide performance is super efficacious across various crops, and we are going in for range extension on many other crops based on farmer experience. So it's a, it's a favorite product across all geographies.
Any approximate opportunity size, if you could help us out with some numbers?
Well, cotton, it sells at 12 million hectares, and chili would be, what? Less than half of that. And almost all horticulture crops like brinjal, okra, tomato. So everything put together, the second pest opportunity is really huge.
Got it. Got it. Thank you so much for the opportunity and congratulations on good set.
Thank you. The next question is from the line of Resham Jain from DSP Asset Managers. Please go ahead.
Hi. Good evening, team. So first of all, congratulations. Good set of numbers. So I have two questions. The first one is, with respect to the new Dahej plant, and it got commissioned during Q2. So I presume that this quarter number would have some element of that, and obviously, initial period, there would be some losses into that. So would you be able to quantify what was that number, the startup cost, if it would have been a part of your PNL?
Yeah, you see, the Dahej plant was capitalized on eighth of August, because production was started in August. In terms of revenue, no revenue in the Q2. In terms of cost, in terms of cost, basically, is around INR 5-6 crore, which is part of this, this cost.
Okay. So which means, the margin which we are seeing actually would have been even better than on a like-to-like basis, because last year's,
Exactly. Exactly.
Okay. Okay. And, also, the second one is, if you can just give an update on, you mentioned that you've started with first product, but, let's say, going forward, what kind of visibility you are having, beyond, Bifenthrin, which you are manufacturing, and any update on, new contracts from, innovator companies?
Right. So, with respect to first part, new products, so we are working in our R&D to develop more products. And as and when the products get developed in the R&D, we'll evaluate them for introduction. That is first. And with respect to the contracts from the multinational companies, we have initiated some visits from some of our partners and talking to them about the opportunity for manufacturing in Dahej. But as of now, no opportunity is in hand.
Okay. Okay, but any, like, so beyond this current one product, are you planning any other product in the same plant or are you thinking about it?
... Yeah, in the current plant, we can manufacture up to 4-5 products because it is a multi-purpose plant, and presently we can manufacture 2 different products. So, next financial year, definitely there will be adding more products in this plant itself.
Okay, understood. Thank you.
Thank you. The next question is from the line of Hussein from Carnelian Capital. Please go ahead.
Hello? Hello.
Yeah. Hello.
Hello.
Hello. Am I audible?
Hello.
Yes.
Am I audible, sir?
Yes.
Yes. I just wanted to understand from you, sir, on the current quarter, what is the mix that we see in terms of the growth, and first of all, I think the new molecules have contributed big time in terms of the sales growth in the first half, but how do you see that panning out in the second half? And how is the base business doing? And so that was the first question, sir.
Right. So, our new products, which are employed, Mesotrax, Decide, Defend. All these products have huge opportunities, especially the two maize herbicides that we have launched, Mesotrax and Implode. So Rabi maize is a good opportunity going forward. South is going to have an upcoming chili season, which will be spanning through entire November to February. That chili would also have a good opportunity for us. BPH opportunity is ahead of us for our product Defend in the month of November, for sure, and then probably again in March. So these opportunities are certainly going to be very powerful. Semcia, which is our recent introduction, with help of Syngenta, is going to find opportunity in almost all horticulture crops. And Tizom, the sugarcane herbicide, will also find space in March, North India sugarcane business.
Overall, we see next five months very promising for all of our new offerings.
Okay. And so I just wanted to understand on the CDMO part. So, any talks with some of the key clients that you have, any update on that front that you would like to share with us?
Right. So we are having very intense discussions with our partners, and there is a huge opportunity as we see going forward, and we'd be very happy to come developments in this forum at the right time.
Okay, got it, sir. Got it. Thank you. So that is the only question. Thank you.
Thank you. The next question is from the line of Viraj from SiMPL. Please go ahead.
Yeah. Thanks for the opportunity and congratulations on the set of numbers. Just three specific questions. First on the sales part, you know, so if you can, specifically on the volume side, if you could just give some perspective in terms of the growth cost at the end consumption level, of the retail level, which is in the customer. And do you see any risk of, sales return, in H2, given the way the monsoon has played in the South, and still some months are remaining so far? That is one.
You are talking about the risk of sales return, right?
Yeah. And generally, how is the growth has been at the retail level for our products, in H1, especially Q2?
So the growth has been good. Volume growth in Q2 has been 20%. And, we try to keep our channel clean, so whatever, is the goods return opportunity, we try to do that on ongoing basis, and we do it kind of season to season. We do not leave our channel stuck with unsold inventories. So our Dhanuka channel is almost clean with unsold stocks. What we have right now is the stocks which are going to be consumed in the month of November. So the risk of goods return is not there, and that's why we are pretty confident that we'll be ending the year on a similar note.
Okay. Second question is on the mix part, especially the one which you talked about in terms of the gross margin improvement. Now, you know, if you look at the new product share in the Q1, you know, it was somewhere around 20%. And if you look at H1, we talked about 16%. So, you know, when even we say the new products which are traditionally more high margin, you know, especially at the gross level, sequentially, that seems to be on a, at the lower end of the revenue contribution. Still, we've seen a very healthy, you know, jump in the gross margin. So is it largely due to the inventory gain or the whole vertical other product mix?
You know, if you just kind of give more elaborate color on the product mix part, you know, what is driving this overall gross margin improvement?
The gross margin is driven by our proactive shifts on the products which were required in the stress situation. We kind of drove our marketing campaigns around selected products to drive the stress, to take care of the stress condition in the field during the Kharif due to low rainfall and high temperatures. That is the shift we made, and those products were accepted well by the farmers as compared to weedicides or fungicides, which were not being consumed. Of course, our new products, like Defend and Decide, they have held the fort for us.
Okay. In terms of, say, was there any element of captive consumption from the technical plant or there was no production basically for the from August to September?
Yeah, there is captive consumption, but that is as of now too small to be, you know, be of impact.
Okay. Just last question. You, you talk about Defend, Implode, and, you know, even the new products that Tizom, right? In terms of the opportunity which you see, you know, in, say, over the next 1 or 2 years or 3 years. Just, just kind of, you know, put an analogy in terms of, say, all your top products, say, Sempra or Targa Super. You know, these all of these that have turned out to be, you know, more than INR 50 or 100 crore kind of a brand for us. So when we now talk about these products, you know, what kind of a similarity or, you know, you see between these products and the one which we, you know, the top products which we had.
You know, if you can just kind of more talk about what you're exactly looking at in terms of which gives you a confidence that this has a potential to be a much more larger brands products for us.
See, if history was any evidence, then the way Defend has moved in Kharif and the way Decide has moved in Kharif, gives me confidence of how they will perform going forward. Defend is a Corteva novel chemistry. It is a insect growth regulator. It controls dreaded dangerous BPH of paddy rice across the country. So with 42 million hectares of rice and BPH being a very resistant pest, this is the best solution farmer has today. So Defend opportunity is ahead of us in East and in South India for the month of October and November, and again in February, March. Decide, a sucking pest product, has a good opportunity in chili and various other horticulture crops and sucking pests in all the opportunities. Now, these two products themselves are, like, pretty powerful. Mesotrax and Implode, our introductions, are maize herbicides.
Maize is becoming a huge commercial crop across the country, with acreages touching cotton acreages. So that again, and you know, maize farmer is becoming pretty progressive. His use of herbicides is like no other crop. So we are pretty hopeful of Decide crossing all imaginable levels in times to come, and then various other products trying to compete for top end position.
So we would have still another 3-4 years, you know-
Sorry to interrupt, sir. My very question.
Yeah, just one, just one, last query on this. For all these three, four products, would we be the exclusive partner or these would also be co-marketed by other players in the Indian context? So typically the partnership-
For Decide and Tizom, Dhanuka is the exclusive partner. These are our 93 registrations, Decide from Mitsui Chemicals, Japan, and Tizom from Nissan Chemical, Japan, and these are our exclusive tie-ups.
Okay, fine. Thank you very much, and I'll come back to you.
Thank you for your interest.
Thank you so much. The next question is from the line of Rohan Gupta from Nuvama. Please go ahead.
Yeah. Hi, sir, good evening, and thanks for the opportunity. Congrats on a very, very solid set of numbers. Just verification, sir. We have done capitalization of roughly INR 170 crore, I think, from the commission of the latest plant, but the depreciation seems to be on a month-to-month basis, quite high, roughly INR 5 crore. That leads to annual depreciation on the new plant of INR 20 crore. Is that number be right? And what, what dividend, what's your depreciation policy we are adopt?
You see, capitalization INR 170, yes, absolutely okay. What is your question?
The depreciation incrementally on Q s eems to be roughly INR 5 crore. That means annualized depreciation of roughly INR 20 crore on INR 170 crore, right?
It is not only INR 170. There was a capitalization last year in Udhampur and certain capitalization in Sanand as well. It's all inclusive.
I'm asking the depreciation for the quarter is roughly INR 10 crore versus-
Yes.
Previous quarter, Q1 was INR 2.6 crore. That is roughly incremental of almost INR 5.3 crore. This is a normal number, normal depreciation going forward, because that depreciation rate seems to be quite high on the capitalized asset.
No, you see, the, without raise, the depreciation was bound to increase this year in quarter two, because of, because of the last year capitalization in Anand, Udhampur, and Keshwana. Right? So on account of the raise, this year would be the incremental is, in this quarter two is not a significant amount because, because of the only two months depreciation has come.
Okay, I'll clarify this further later. Sir, in terms of the monsoon, definitely we have seen a very solid growth in Q2 with the 20% you mentioned the volume growth. However, the realization growth is still remains negative, I think, given the coming raw material prices. We have seen that October so far now has not been that great for the monsoon, and the Rabi crop output has been slightly lackluster. So, how do you see the second half of the year panning out? That is one. And second, sir, your earlier EBITDA margin guidance, you were talking about roughly 150 basis points, 150 basis points actually incremental. How that margin stand now after a solid performance in Q2?
So we are looking at a good Rabi with rainfalls, especially in South India, and we are also looking at East India as a good opportunity in the next five months or H2, so to say. And we are pretty confident of delivering a similar number by end of the year in terms of top line growth. And EBITDA margin growth of 200 basis points is looking sure. No, gross margin. Sorry, gross margin upgrade of 200 basis points is looking sure.
Okay. Okay, sir. That's it from my side. Thank you so much.
Thank you. The next question is from the line of Prashant Biyani from Elara Securities. Please go ahead.
Yeah, thanks for the opportunity. Sir, Decide, stocks that we would have played, the consumption would have happened by now, or it will happen in Q3?
All, all Decide which has been, you know, involved in Q2 is consumed.
On the technical side, how much prices of Bifenthrin or any other products which we want to start, maybe in the next few months, how much price increase should happen in those products to make it profitable at gross level, or it is already profitable because the sales are maintained?
Bifenthrin is already profitable at gross level. Some of the other products that we want to manufacture, we are looking for a correction of about 10%-15% in the prices for them to become profitable at gross level.
Right. And, for Q3, we would be, we are continuing with normal production for the entire quarter. That is what we would have planned for Bifenthrin?
Yes. For Q3, we will be achieving our production target for this quarter.
Okay. Thank you. That's it from my side.
Thank you. The next question is from the line of Harshit from B&K Securities. Please go ahead.
Hi, sir, thanks for the opportunity and greetings to all of you. Sir, just from picking up from the last call, we were looking at close to INR 50 crores of revenues from Bifenthrin and another 10, and maybe close to INR 6,200 crores in FY 2025. Do we still stick to that target?
For FY 2024, I feel we had some; we are behind in the last quarter on our numbers from Bifenthrin. So FY 2024 number, I have my doubt, but FY 2025, I'm confident of delivering INR 100 crore revenue from Videsh.
Sure, sir. So just one more question, rather a small confusion that I had. While our receivables in the semi-annual balance sheet have gone up at close to INR 180-190 crores, and we mentioned about, you know, sales returns not being a challenge, would it be safe to assume that, you know, almost half a quarter down the line, whatever we have placed in the 2Q has been more or less consumed in the current quarter, but receivables must not be a problem going ahead?
Right. So, you know, goods return is happening on a season basis. But I'm not saying goods return is not a problem. We don't like goods return. Yet, at Dhanuka, we keep the channel clean, so if there is unsold stock, we try to turn it around very fast. Right? So that is about goods return. And our receivables are being managed very, neatly, I would say, and very micro. So yes, in terms of the, proportionate increase in, our outstanding is there, but that is very much in control.
Sure, sir. Thanks. Just one last. So there's a INR 50 crore loan facility that we have created for Dhanuka Laboratories. Could you explain or rather elaborate the terms for what it's been given for and anything on that front, sir? Thanks. Thanks a lot.
Dhanuka, you see, that approval we have already taken, it is just for the sake of approval. At times, they need even support. That's it.
Got it. Got it. Thank you, sir. Thanks a lot. All the best.
Thank you. The next question is from the line of Kunal from Centrum Broking Limited. Please go ahead.
Thank you for the opportunity, sir. Congratulations on the good set of numbers. So just one question from my end. Just wanted some guidance on FY 2024 and 2025 numbers, revenue, and EBITDA margins.
Twenty-four, twenty-five?
Yeah.
This is a good opportunity for us to start working on FY 2024, 2025 numbers. So we are still working on that, and probably we'll be ready by the next quarter call.
Okay. Okay, sure, sir. Thank you so much.
Thank you. The next question is from the line of Yash Dantewadya from Dante Equity. Please go ahead.
Hello. Yeah, I just have one question. Regarding the new technical plant in Dahej, what is the asset or not that we should expect and by when?
You see, it is a little early to comment. Our R&D team is working very hard day and night. It depends on product mix. You see, it's a little early to answer this question.
When can I get back to you with this question?
Probably in the financial year end, after six months.
Okay. Perfect. Thank you.
Thank you. The next question is from the line of Sagar Shah from Piper Serica. Please go ahead.
Thank you so much for the opportunity. First of all, congratulations for excellent set of numbers and great results by Dhanuka actually, in such a unique environment, actually. So my first question was related to that only, that in the month of July, we saw robust rainfall again in August and September, there was separate rainfall. And again, there are some specific doubts regarding rainfall in Southern India, especially in November and December, and where there is actually major market for spices, as you said in the introductory call. So basically, my view was, in spite of that, your product Decide to did very well, actually.
My question is whether we are actually really confident of good performance in H2 also, in spite of the Rabi reservoirs are not fully built also, and there could be some significant headwinds actually going ahead for the at least for the entire industry. That is one thing. My second question was some sort of, you can say, data keeping that Decide constituted how much was in absolute terms what was the turnover Decide actually out of the total revenue? And the last question was basically almost your new launches have contributed around 60% of total portfolio.
You have already explained the kind of, kind of, you can say, the new, the new products, performance that you are actually expecting in H2 and going ahead also. But, I wanted to... I wanted some parts that, can we see the new products or revenue crossing 20% also going ahead in the fiscal year and overall view on, even on the biopesticide products. So these are my three questions, sir.
Thank you for that question, and, I absolutely appreciate the prelude to your question in terms of the headwinds. We are absolutely facing a difficult situation when it comes to El Niño, the recurrent of poor rainfall in the most important month of August, and, the low reservoir levels in various parts of the country. Now, these absolutely are the challenges faced by us at Dhanuka, by entire agri-input industry, but worst of all, by the Indian farmer.
Yes.
I can only say that we at Dhanuka are doing whatever little we can do to make an impact to the farmers who have some opportunity to get the best value out of their crop, to get the best value out of their land. So our efforts, our contribution on that front translates into our financial results, which we are discussing here. But what we are not discussing here is the plight of the farmer, and nothing more to add over there, too. Talking about our product opportunities, well, the opportunities are actually becoming better because farmer will be going for crops like maize, which will be relatively consuming lesser water. There, our Implode and Mesotrax, which are powerful herbicides, will find opportunity in the Rabi.
The water levels in the paddy fields, where farmer is growing paddy, will be challenged due to lack of rainfall, so BPH attacks will be more intense. When the BPH attack will be more intense, then this will give opportunity for Defend, which is our BPH product from Corteva. Low moisture conditions and dry situations in the fields will give rise to mites and sucking pest challenges in chili and almost all horticulture crops, which is having high price and high value today. Onion prices, tomato prices, chili prices are all-time high again. So farmer will need good solutions, effective solutions, reliable solutions to control those menace. And then he will fall back on Dhanuka's good quality products. That is how I think so we are absolutely confident of standing our ground in H2 also, and year after year.
Okay. Sure, sir. So, my just one that data keeping question that besides are constituted in absolute terms was how much to our total top line in this quarter, sir, or maybe in H1?
I really thought you will forget that one, but we do not share specific numbers on the products in the call.
Okay.
Yeah, maybe have someone saying, yeah, thanks.
Okay. So, basically, is it fair to assume by this last question is that, in FY 2025, 2026, at least, we will see if we get a decent rainfall, so our new product introduction, the introduction revenue would cross about 20%?
Oh, yes. New product NPI index will certainly be much higher. We are absolutely sure of the NPI index being much higher in H2 as well as in FY 25.
Okay. Okay. Sure, sir. Thank you so much. All the best, sir.
Thank you.
Thank you. The next question is from the line of Ajay Surya from Nivesh India. Please go ahead.
Congratulations on a good set of numbers. My question is, if I look at the overall share from innovative products, it has been constantly increasing, and even for this H1, it has been around 16%. Sir, what share of overall revenue do we foresee from these innovative products in coming 2-3 years? And what sort of margin differential do we have, apart from the other non-innovative products and these innovative products?
You see, ITI Index, we are simply expecting the year-end similar improvement. In the first term, the improvement over previous years, around 2%, 200 basis points. We are expecting by the year-end similar percentage. In terms of margin, yes, definitely margin is better as compared to the overall margin in ITI products. Absolutely.
Sir, the innovative products are also only for this side, or would that be insecticide?
I could not get your question.
Sir, these innovative products which we have, sir, are those more inclined towards herbicides, or are those insecticides, or what are those?
ITI Index is the current year plus previous three years. It is combination of all herbicide, insecticide, and fungicide. All three types categories are appearing, and this year we have introduced three herbicides. Mesotrax, Implode, and Tizom are three herbicides. Defend and Semcia are two insecticides.
Okay. So my next question is, what capacity do we currently have on the formulation and capacity utilization that we operate?
See, formulation is a relatively simpler operation, and, we do not have a capacity constraint. We have three units, one at Sanand, one at Udhampur, and one at Keshwana. All three units, are doing really good in terms of the capacity utilization, not being too high. And, we can almost double the revenue from our existing capacities.
Got it, sir. Thank you. That's it from my side.
Thank you. The next question is from the line of Viraj from SiMPL. Please go ahead.
Yeah, I just have one query. You know, so once we see which kind of normalizes at the end of the year, the cash on the balance sheet would be, like, significantly higher. So any thoughts in terms of deployment of this?
You see, we are already in this process. We are spending everything now. You see all investment of the internal accruals, and we are doing... We already made three buybacks, and, we are paying handsome dividend. So now the cash is being maintained at a similar way over the last few years. It's not decreasing too significantly. The moment it crosses a certain level, some investment are happening, and the buyback is happening, and dividend paying is happening.
Okay. That's all from my side. Thank you.
Thank you. The next question is from the line of Manish Mahawar from Antique Stock Broking. Please go ahead.
Yes, sir. Just in terms of your product, right, Decide, which chemistry has replaced actually, in terms of, overall market perspective?
Okay. So second test is a huge event. This product would have replaced the neonicotinoid chemistry in the market, like imidacloprid, acetamiprid, clothianidin. So these are some of the... thiamethoxam. Some of the examples of the second test products being used in chili, cotton, tomato, brinjal, okra. So-
Understood. And same, the same in terms of a Defend, right? Which is more of a BPH, right, as segment. So it is same, which are the chemistry? Because BPH is very, very old, I think, place which newer and newer chemistry is coming, which are replacing the older one, right? So, which are, which are the chemistry is replacing, and do we have a existing product which are, supplying to our BPH?
Well, this one is not replacing any BPH, so Decide is not a BPH product.
No, Defend, sorry. Defend I'm talking about.
Yeah, Defend is the BPH product.
Okay.
Defend is doing really well, and it is probably going to replace a large part of Pymetrozine in consumption.
Okay. So basically, earlier, I think so it's more of a Buprofezin, then it came to Dinotefuran, and it came to Pymetrozine, and now it's came to your, this one, right? Defend, you are saying.
Yes.
Okay, understood. And last one, again, in terms of your product, Tizom, which is a combination of, I think, your old product, which is a-
Sempra, and I think your Barrier is a product, is a combination of these two, right? So it is replacing-
Combination products, yes.
These two products, right, of our portfolio. Which is more effective in terms of combination or it just as filling the gaps in the portfolio?
So, so when we try to bring in a combination, the idea is to identify the segments of pharma which need that combination. So there is a particular set of farmers, you know, which needs that combination, in terms of the differentiated weed profile in the field. So our scientists, our field R&D team, they continuously interact with the farmer, they survey the fields, and they try to identify the gaps farmer is facing. And we try to offer solutions to the farmer, one, to meet those gaps; two, meet those gaps effectively; and three, have a product which is very efficient. So as Tizom, we are trying to offer sugarcane farmer the very efficient solution of total weed control in his field. And the results are absolutely, absolutely amazing.
Okay. But it's the same place, right? I take for, for the same place what the Sempra we launched about, right?
So yes, it does control Sempra weeds, which are controlled by Sempra, because it's a combination of Sempra, but it controls many other weeds which were not controlled by Sempra.
Okay, understood. Okay. Sure, that's what I said. Thanks.
Thank you. The next question is from the line of Resham Jain from DSP Asset Managers. Please go ahead.
Yeah, thanks for taking my question again. So, two questions. So first one is, at the headcount, you earlier mentioned, that you have two phases of, in which you will be doing CapEx. So second phase of CapEx, should start next year, or, or maybe 2026, and will it be you will wait for innovator kind of CDMO products to come in, or you will start with your, own, technical, kind of own products in phase two?
So, yeah. We have several products in our development pipeline. As and when they, you know, reach the maturity stage, we'll be introducing them. In the current plant, we have the ability to add another 2, 3 products. But we will not wait for collaboration with international partners or contract manufacturing to go for fresh CapEx. As more and more products come from our R&D, we will be doing fresh CapEx, probably next FY also, but it will all depend on how quickly the R&D is able to get products developed.
Okay, understood. The second question is, we have investment in a drone company. So if you can just give some update on the same, and any further series over there, any possibility, any update over there would be helpful.
Yeah. So drones are being received, like, really well by the farmers. The drone company that we are working with had earlier launched a version. Original version was the first one to be approved by DGCA. That version required a four-wheeler to carry it around in a big, heavy box. Now, the drone company, IoTech, has come up with a lighter version, which required a box on motorcycle to be carried around, and they have further upgraded the drone into a backpack. Motorcycle carried backpack version to move around. So which has made it really handy to reach the interior villages and up to the field of the farmer as compared to a four-wheeler, which was required a year ago. So the company is working on a strong supply chain and offering upgraded solutions and versions to the farmer.
We are working very closely with the farmer side, and doing various projects and experiments in different crops and with different products. I think so drones is a really, has a very promising future.
Okay. Any numbers over there?
I think so this will not be an appropriate space to talk about their numbers. As an independent company, they'll be doing their numbers on their own.
What stake you will be having after maybe second or third round, or whatever stake you have currently is the final stake?
Well, we have what we have right now, that's stable, and as of now, no decisions on the next rounds of stake change.
Okay, understood. Thank you. All the best.
Thank you. Thank you so much.
Thank you. Ladies and gentlemen, we take that as the last question, and I would now like to hand the conference over to the management for closing comments.
Friends, in the end, I would like to thank all the participants for joining us today. We are looking forward to a great quarter. Dhanuka is committing to transform India through agriculture. Our purpose is to strengthen the nation by providing sustainable agricultural solutions and bring honor, pride, and abundance for the farmer and farming community. Thank you very much. Goodbye.
On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us. You may now disconnect your lines.